Boston College’s Center for Retirement Research Center has a study out this month about the cost of 401(k) plans, and they have found another flaw in the nation’s defacto retirement savings system: It is overpriced. So not only do 401(k) plans not meet the needs of the average American, they aren’t cost effective either.

I pulled my tiny 401(k) savings right before The Great Recession. It was because I quit the job that provided me with the account. If I hadn’t, I would have ended up with less money after investing than I had put in. As it was, after two years, the account had stayed about even. I would have had the same amount of money whether it had been in savings, the 401(k), or in my mattress. This personal experience gave me the inkling that 401(k)s might not be the infallible vehicle for retirement security that they had been pitched to me as.

Stephen Gandel, the author of the article above, also wrote:

The ugly truth, though, is that the 401(k) is a lousy idea, a financial flop, a rotten repository for our retirement reserves. In the past two years, that has become all too clear. From the end of 2007 to the end of March 2009, the average 401(k) balance fell 31%, according to Fidelity.

Also, individual participants in 401(k)s have little choice regarding what they are investing in. They typically get the option to work with one company, and chose between a limited number of products. If the employee objects to the corporations that their money ends up supporting, tough luck. No retirement for you!

Now I have an IRA through a credit union. The account makes me somewhere between $5.00 and $15.00 a year. I’m rolling in it.